Davis Polk is advising the administrative agent in connection with the debtor-in-possession financing facility (the “Peabody DIP Facilities”) for Peabody Energy Corporation and certain of its direct and indirect subsidiaries (“Peabody”) provided by certain of Peabody’s prepetition first-lien lenders and significant unsecured noteholders. The Peabody DIP Facilities include a $500 million term loan facility, a $200 million bonding accommodation facility, which can be used, at Peabody’s option, either to cash-collateralize letters of credit to secure surety bonds in favor of state environmental regulators or to provide a superpriority administrative claim to such regulators, and a cash collateralized $100 million letter of credit facility. Davis Polk is also advising the administrative agent in connection with Peabody’s $2.85 billion prepetition first-lien secured credit facilities (the “Peabody Prepetition Facilities”).

The Peabody DIP Facilities were approved by the U.S. Bankruptcy Court for the Eastern District of Missouri at a hearing held on May 17, 2016, and a final order (the “Final Order”) authorizing the Peabody DIP Facilities will be entered on or after May 18, 2016. The funding of the Peabody DIP Facilities and Peabody’s cash on hand are to be used for general corporate purposes. The bankruptcy court also approved priming liens for the lenders under the Peabody DIP Facilities and an adequate protection package for the lenders under the Peabody Prepetition Facilities. The Final Order reflects a package deal on various financing and adequate protection issues reached among the agent, Peabody, and the official committee of unsecured creditors (the “Committee”) in Peabody’s bankruptcy cases, and the comprehensive package contemplated therein was presented to the bankruptcy court on a largely consensual basis.

Peabody is the world’s largest private-sector coal company by volume, with 26 active coal mining operations located in the United States and Australia. As of December 31, 2015, Peabody and its subsidiaries’ property holdings included 6.3 billion tons of proven and probable coal reserves and approximately 500,000 acres of surface property through ownership and lease agreements. Peabody employed approximately 4,500 active full and part time employees and generated sales of approximately 180 million tons of coal in 2015. Peabody and its debtor subsidiaries filed for protection under chapter 11 of the U.S. Bankruptcy Code on April 13, 2016, and their cases are being jointly administered pursuant to Bankruptcy Rule 1015(b).

The Davis Polk insolvency and restructuring team includes partner Damian S. Schaible and associates Darren S. Klein, Angela M. Libby, Rebecca Van Derlaske and Jonah A. Peppiatt. The finance team includes partner Kenneth J. Steinberg and associates Hilary Dengel and David S. Wheelock. Partner James I. McClammy and counsel Michael J. Russano are providing litigation advice. All members of the Davis Polk team are based in the New York office.

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